Tesla Motors Generic and Intensive Strategies

Generic and Intensive Strategies of Tesla Motors

 

Tesla is known mainly as the maker of fully electric vehicles. It also makes and sells energy storage systems as well as installs, operates and maintains solar and energy storage products. The brand has its own sales and service network that it has continued to grow globally. Tesla has established a global network of vehicle stores, service centres and Supercharger stations to increase the widespread adoption of its products. Two of the models that Tesla currently sells are fully electric but come for hefty prices.  However, it has also planned to release Model 3 at a lower price that will be produced and sold in larger volumes. Tesla expects it to be an affordable hit.

The main focus of Tesla is to help the world transition to sustainable energy though the use of electric vehicles and other sustainable solutions. It is growing its network fast in North America, Asia and Europe. This is an analysis of the generic and intensive strategies that it  has used to build sustainable competitive advantage and grow its market and brand presence.  Michael E Porter has highlighted three generic strategies that can be used to generate competitive advantage. These strategies are cost leadership, differentiation and focus. He has further divided the last one into two categories – cost focus and differentiation focus.  Apart from it, there are four intensive strategies that brands can use to grow their customer base and sales. The focus of this essay are the strategies used by Tesla:

 Tesla Motors generic and Intensive Strategies

Generic strategy:

The generic strategy that Tesla has used is that of differentiation. Very few brands sell fully electric vehicles and Tesla has further differentiated its brand by adding luxury to its cars. Its cars are outstanding in terms of utility and luxury both. The two models of EVs that it makes are Model S and Model X. The first one is an electric sedan while the second is a sports utility vehicle.  Model S has a unique combination of functionality, convenience, safety and styling  to offer without compromising performance and energy efficiency.  Model X has a beautiful falcon wing door system that completely matches the vehicles personality. Other elements like a 17 inch touch screen driver interface add to the brand’s style quotient.  Tesla is also developing a third  generation of electric vehicles which it has decided to price lower in order to make stylish EVs available to a larger  segment of buyers. Apart from making these vehicles the brand also makes energy storage products. Overall, the brand has differentiated itself from the crowd of vehicle brands by focusing only on sustainability solutions whether in terms of vehicles or energy.

Intensive Strategy:

 

Market development:

Market development is the strategy of introducing the product into new geographical regions or markets. Tesla has grown its market from North America to Asia and Europe. United States is among the most important markets of Tesla. It is also building its network of super chargers to grow the presence of its brand and sales in these three continents which represent its main markets. It offers loans and leases for its vehicles in these areas. The brand has continued to expand its production capacity at its Fremont Factory but apart from that it is also looking forward to add to its production capacity in Asia and Europe.

 

Product development:

This is another key strategy used by Tesla to grow its range of products and its customer base. Tesla has made two great looking vehicles that are a combination of utility and luxury. It is why most of the competition for Tesla comes from the luxury vehicles segment. However, Tesla is planning to produce a third category of vehicles targeted at the lower end market for the middle class consumers. However, the product range of Tesla is larger. It also makes sustainable energy solutions like energy storage systems and solar energy products including solar panels, power wall, solar roof and other utilities. This large product range has helped Tesla differentiate its brand and reduce the competitive threat. It has also helped the brand build a large customer base that is interested in sustainable energy and related products.

 

Sources:

http://ir.tesla.com/secfiling.cfm?filingid=1564590-17-3118&cik=1318605

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.